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Tamil Nadu draws up
consortium approach
Suchitra Srinivas
 IT
slowdown that compelled global corporations to cut costs and shift
operations to India has heated up competition among South Indian states
for a larger share of the outsourcing pie, with Tamil Nadu banking on
the consortium approach to win the race.
Andhra Pradesh,
Karnataka and Tamil Nadu, which lay the foundation for Indian
Information Technology industry, together contribute over 60 per cent of
the country’s annual IT export turnover. The competition among the
three States has increased of late, especially between Karnataka and
Tamil Nadu, following the emergence of India as a preferred outsourcing
destination.
To cash in on the jobs
being pushed into India, Tamil Nadu has drawn up the consortium approach
that envisages sharing of knowledge, expertise, marketing efforts and
project execution between the small and medium enterprises (SMEs).
STPI Director (Chennai)
R Rajalakshmi told UNI the "consortium approach" would be the
ideal resort for the SMEs to survive the emerging market trends where
companies cut costs drastically as clients prefer to push jobs offshore.
She noted that with the
establishment of ‘Camelot Software services’ (CSS), a consortium of
six software companies, Tamil Nadu has clearly emerged as the forerunner
in the game.
CSS Chairman N L
Rajaram said SMEs have standalone domain expertise, which may not be
attractive for the client companies to award orders. Having a structure
like TIDEL would definitely add to the efficiency as infrastructure and
expertise can be shared.
Of the 650-odd IT
services exporting companies in Tamil Nadu, over 400 are in the SME
sector. These companies have a turnover of less than Rs 10 crore and are
the most disadvantaged in terms of winning contracts. The consortium
approach would be the ideal solution to tide over the crisis,
Rajalakshmi said.
Camelot has
successfully undertaken some projects involving two to three consortium
players. Dr Rajaram said the company was confident of emerging as a
successful model.
Set up in May this
year, CSS is one of the first commercial experiments of its kind.
Similar models were discussed in Hyderabad and Bangalore but CSS was the
first to take commercial shape, she noted.
Rajalakshmi said
creating a structure similar to TIDEL — the IT park providing the
infrastructure facilities for information technology industry — was
being analysed for software SMEs.
E-Mitra was yet another
consortium model floated in the state that works on similar principles.
More such measures are on the anvil, Ms Rajalakshmi said.
Tamil Nadu is marching
ahead as major IT players from Bangalore are making a beeline to Chennai
for setting up development centres, the latest being Wipro and Infosys.
Infosys Technologies is
setting up its second development centre at a cost of Rs 250 crore at
the Mahindra Industrial park. It will come up over 129-acre land and
will have about 5,000 employees when fully developed in three to four
years.
Tata Consultancy
Services is also setting up one more development centre here at Siruseri.
It plans to invest about Rs 200 crore, including Rs 13 crore in a
70-acre land at Siruseri, in three or four years.
The other firms that
have presence in Tamil Nadu include Cognizant Technology Solutions,
Sutherland, Covansys, Scope, Hewlett-Packard, Verizon, lason, World
Bank, Electronic Data Systems, Ford Information Technology, Xansa and
IGate.
In the last one year,
it is not just multinationals which have made a beeline for Chennai but
other large IT players also are making it their second home.
Today, over 860
companies are operational employing over 40,000 professionals and an
export turnover of Rs 6,316 crore. Hardware exports from Tamil Nadu
during 2001-2002 stood at Rs 482 crore.
A Confederation of
Indian Industry (CII) report observed that Karnataka held 59 per cent of
the software services export market in contrast Tamil Nadu’s 25 per
cent and 16 per cent of Andhra Pradesh in 2001.
Last year, Karnataka’s
share moved down to 55 per cent and Tamil Nadu’s moved up to 29 per
cent. Andhra Pradesh remained at 16 per cent.
However, IT
developments remained restricted to metros with Chennai, Bangalore and
Hyderabad being the major centres.
PricewaterhouseCoopers
(PWC), which studied the fall in profits with decline in the billing
rates by about five dollars per hour, rated Bangalore as the worst
impacted city with Chennai and Hyderabad following suit in that order.
It was estimated that
profits could fall by 78 per cent in the operations at Bangalore as
against 65 per cent drop in Chennai and 61 per cent Hyderabad when the
billing rates dropped.
The real estate costs
were higher in Bangalore as compared to Chennai or Hyderabad that added
to the cost of operations, the PWC study said.
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